Vacation Pay Rights in Ohio at time of Termination

An Ohio employer is not required by law to give its employees any vacation, holiday or other paid time off. Accordingly, when an employer provides paid vacation, it can establish the rules under which employees receive that benefit, including payment of unused vacation at termination. If the employer's policy provides for payment of accrued but unused vacation at the time of termination, courts in Ohio have held them to it, unless the employer clearly showed it did not intend to be bound by the policy.

Ohio Courts Have Enforced Vacation Pay Policies

If an employer has clearly written vacation pay rules, the court will use those rules to determine whether unused vacation is payable at termination. If employers says that they will pay accrued but unused vacation at termination, Ohio courts have held them to it. See, e.g., Spry v. Mullinax Ford (Nov. 13, 2000), Stark App. No. 2000CA00118, 2000 Ohio App. LEXIS 5265.

If the employer does not have written rules, courts can examine the employer's past practice and other facts surrounding its payment of unused vacation to determine whether the employer pays unused vacation at the termination of employment. Conversely, if the vacation policy or the handbook in which it is contained states that the policy or handbook is not a contract, courts may refuse to order the employer to follow its own policy. Dunlap v. Edison Credit Union, Inc., 186 Ohio App. 3d 370, 2nd App. Dist. 2010-Ohio-593).

Ammons v. Akromold, Inc. (May 20, 1998), Summit App. No. 18641, 1998 Ohio App. LEXIS 2202; Winters-Jones v. Fifth Third Bank (May 27, 1999), Cuyahoga App. No. 75582, 1999 Ohio App. LEXIS 2410 (holding that former employee was not entitled to payment for vacation time accrued but not used at the time she left her employment where the company's policy manual clearly stated that vacation time must be used during the employee's employment or is lost);

Bologa v. I.H.S., Inc. (Mar. 17, 1999), Summit App. No. 19218, 1999 Ohio App. LEXIS 1107 (determining employee was not entitled to unused vacation pay at termination where employer's vacation policy stated that no paid time off would be paid out at termination).

Although employee handbooks and policy manuals are not in and of themselves contracts of employment, they may define the terms and conditions of an at-will employment relationship, so long as the parties manifest an intention to be bound by them. Mers v. Dispatch Printing Co. (1985), 19 Ohio St.3d 100, 104; Sowards v. Norbar, Inc. (1992), 78 Ohio App.3d 545, 549. A statement that a policy or handbook is not a contract may manifest the employer's intent not to be bound by the policy or handbook.

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